Should get started in REI with a partner or no?

11 Replies

Hello everyone,

I'm still in the early stages of gaining knowledge and trying to figure out what the best route for real estate is for me.  Well, I have a good friend of mine/college roommate/teammate that is also wanting to get into real estate.  This friend actually got drafted a couple of years back into the Major Leagues but is no longer playing ball anymore.  So he has a nice chunk of change to get started in a deal, he just has no credit what so ever and is really just wanting to partner.  Me, I have pretty good credit but the capital just isn't there.  He is a single individual and is still in school.  I am a married/father living in Houston with a F/T job. 

Should I partner with him to get things going? If so, i have no clue how that usually works?

Or should I just do it myself and start my own real estate portfolio for my family and I?

thank you very much

Yes.  What you have is the perfect scenario.  Partners should be put together where each of the partner's strengths cancel out the other's weakness.  When you put together partnerships that are made up of friends that have the same strength/weakness, you are looking to fail.  All you need is to make sure you have the knowledge of the market you will be investing in, the ability to find that market, and understanding of rehab, and an understanding of how to analyze a property for profit (cash flow) and at least 5 different exit strategies.  The deal doesn't have to satisfy all 5, but it should satisfy at least 2 (I like at least 3).

If you are not prepared to move forward having the knowledge I listed above, then you need a third partner that has that knowledge...and you need to get that knowledge so you can go back to just the two of you as partners.

While you do your first deals together, you should also be building up your cash/credit so you can go alone if that is your ultimate goal.  If/when this happens though, you may just decide to keep the partnership of just the two of you together...since it's working out well.

You might consider doing RE "on your own" with your friend as a private lender early on. That way you minimize the entanglement while still giving him returns he can't get elsewhere very easily (8-12% interest).  As you gain experience and he sees your track record, then it may make more sense for him to be an equity partner where he gets better returns but is also taking a bit more risk.  

Send me a colleague request if you want some tips on education/ mentoring opportunities in the Houston area. 

I kind of agree with Doug on this one.  New investors partnering together can work out well, but it can also ruin your relationship if things do not work out well.

@Joe Villeneuve

Thank you very much Joe..  You definitely have my mind racing and will be talking with him this evening

@Doug McLeod

@Chris Bounds

Thank you both very much as well. I will be looking more into Private Lending as I know very little about it right now. This is getting very exciting because I'm starting to realize that it is very possible for me to get started in REI.

Thanks again. 

Do either of you guys have any construction knowledge?  What kinds of deals do you want to do?  Fix and flip can be challenging if you are just starting, but can be done.

Would you want to start with a rental?  He could be the cash part, and you manage?

Good luck!


@Derek Walvoord

 Hello Derek, unfortunately neither of us have construction business. 

 We would really be looking at a rental property.

I will be meeting with him this weekend and will definitely bring that up.

I would recommend doing a deal or two 1st before entering any partnership. By doing this, you'll know what to expect and has prior experience to better manage the relationship. Partnership has more moving parts. 

It's like learning to ride a 250cc kawasaki before jumping on to a 1000cc Honda cbr is a better idea than jump straight into the honda

@Huy N.

Thank you Huy for your input. I'm a motorcycle man myself and know that jumping on a 1000cc CBR first wouldn't be a great Idea.


If he has capital you can put a subject 2 deal together, split the profits while having very little liability.  

@Benjamin Blackburn

Do you both share the same goals? What type of return is he looking for? And what is his investment time horizon? When will he need the money back?

I would probably do your first deal by yourself to learn the trade, and then once you understand the ins and outs, go back to him for a future deal.

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